Dreyer v. Kicklighter

• Decision Date: 12 January 1916
• Citation: 228 F. 744
• Parties: DREYER v. KICKLIGHTER.
• Court: U.S. District Court — Southern District of Georgia

228 F. 744

DREYER v. KICKLIGHTER.

United States District Court, S.D. Georgia.

January 12, 1916

In the first part of the year 1912, certain creditors of the Perkins Lumber Company, a corporation of this district, obtained judgments against that company in the justice court of the 1607th district, G.M., of Tattnall county, and executions were duly issued on these judgments. These executions were turned over to the constable of the 401st district, G.M., and they were by him on the 9th day of April, 1912, levied upon a certain skidder as the property of the defendant company, and on the third Saturday in April, 1912, to wit, April 20, 1912 said skidder was sold at public outcry by the constable and bought by one Dr. Ellabee acting as agent for the defendant W.T. Kicklighter, at the price of $200. Subsequently on May 4, 1912, a petition in involuntary bankruptcy was filed against the Perkins Lumber Company and an order of adjudication was entered on May 24, 1912, and thereafter Mr A. E. Moynelo was appointed trustee for the bankrupt, and on the 26th day of June, 1912, the trustee brought a bill in equity against the defendant, Kicklighter, for the recovery of said skidder or its value, which was claimed to be $1,000. Moynelo died while the suit was pending, and Mr. Joseph M Dreyer was elected trustee in his stead, and the bill proceeded in his name. Complainant alleged that the bankrupt was hopelessly insolvent for many months preceding its adjudication, and that during this time its business was shut down and its affairs were in the hands of a committee of creditors, and that these facts were well known to the defendant, Kicklighter, and that the judgments were rendered and the sale occurred within four months of the filing of the petition in bankruptcy; that the property was not exposed at the place of sale when sold by the constable; that the defendant, Kicklighter, conspired with the constable and with the plaintiffs in fi. fa. in having the sale made secretly and without notice to the Perkins Lumber Company or any of its officers or agents or attorneys; that the property was bid off at the inadequate price of $200, whereas as a matter of fact it was worth $1,000; and that for this and other reasons the said defendant was not a bona fide purchaser for value, and that the sale was void. The trustee prayed that the sale be declared null and void and that he be allowed to recover the property or its value for administration as a part of the estate of the bankrupt. The defendant demurred to the petition, and the demurrer was overruled, and thereupon the case proceeded to a trial upon its merits.

Saussy & Saussy, of Savannah, Ga., for complainant.

M. A. Smith, Jr., and W. G. Warnell, both of Hagan, Ga., and Edward S. Elliott, of Savannah, Ga., for defendant.

LAMBDIN District Judge (after stating the facts as above).

The trustee, who is the complainant here, seeks to recover a certain skidder from the defendant, who had bought same at a sale made thereof under several justice court executions based upon judgments less than four months old, as stated above, and the trustee claims that said sale was null and void for the following reasons: Because it was not properly advertised; because the levy was an excessive one; because, under the law of Georgia, it is not legal for a constable to sell personal property without exposing it at the time and place of sale; and, lastly, because the facts in the case show that the defendant was not a bona fide purchaser for value without notice of the insolvency of the defendant, or reasonable cause for inquiry, as provided by the Bankruptcy Act.

1. The evidence seems to be clear that proper notices of the sale were posted up, but that same were washed off the boards where posted by a heavy rain on the night before the sale. The court, therefore, is of the opinion that the sale was properly advertised. Nor does the court think that the levy was such an excessive one as to be void.

The next point made by the trustee is that the sale was void because the constable did not bring the skidder to the court ground on the day of the sale, and this raises a more serious question. Section 6060 of the Georgia Code of 1910 is in the following language:

'No sales shall be made, by the sheriffs or coroners, of property taken under execution, but at the courthouse of the county where such levy was made, on the first Tuesday in each month, between the hours of 10 a.m. and 4 p.m., and at public outcry: Provided, that in all cases where any sheriff, coroner, or other levying officer shall levy any execution or other legal process upon any corn, lumber, timber of any kind, bricks, machinery, or other articles difficult and expensive to transport, said officer may sell said property without carrying and exposing the same at the courthouse door on the day of sale. But the levying officer shall give a full description of the property, and the place where it is located, in the advertisement of the sale.'

Counsel for the trustee contends that the proviso in the section of the Code above quoted applies only to the sales of personal property made by sheriffs and other levying officers who sell same at the door of the courthouse of the county, and that only such officers are authorized to sell machinery and other articles difficult and expensive to transport without carrying and exposing the same 'at the courthouse door,' but that this does not apply to constables, who make their sales. in some instances, remote from the county seat, at places where the justice courts are held. I do not find that this precise question has ever been decided by the courts of this state. It is a general rule that all levying officers, in the absence of statute or express order from the court, should be required to expose the property at the place of sale where they sell same. Had the constable in this case brought the skidder in question to the justice court on the day of the sale, the attorney for the bankrupt company would have seen it, and would have had notice of the sale, and the property would not have been sacrificed by sale to the defendant at the small price which he paid for it. According to the strict letter of the statute above quoted, the court is of the opinion that there is some merit in the contention of the trustee on this point; but it is not necessary, however, for the court to decide this question, as the court holds that the sale was void for other reasons, as shown in this opinion.

2. The judgments under which the skidder involved in this case was sold were obtained within four months prior to the filing of the petition in bankruptcy against the Perkins Lumber Company, and were therefore, in accordance with the provisions of the Bankruptcy Law, null and void. Section 67f of the Bankruptcy Act is in the following language:

'That all levies, judgments, 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 a petition in bankruptcy against him, shall be deemed null and void in case he is adjudged a bankrupt, and the property affected by the levy, judgment, attachment, or other lien shall be deemed wholly discharged and released from the same, and shall pass to the trustee as a part of the estate of the bankrupt, unless the court shall, on due notice, order that the right under such levy, judgment, attachment, or other lien shall be preserved for the benefit of the estate; and thereupon the same may pass to and shall be preserved by the trustee for the benefit of the estate as aforesaid. And the court may order such conveyance as shall be necessary to carry the purposes of this section into effect: Provided, that nothing herein contained shall have the effect to destroy or impair the title obtained by such levy, judgment, attachment, or other lien, of a bona fide purchaser for value who shall have acquired the same without notice or reasonable cause for inquiry.'

This provision of the Bankruptcy Law not only strikes down the judgments under which the property was sold, because rendered within the inhibited period, but also the levies made by the constable of the executions issued on these judgments, and the sale itself made by virtue thereof to the defendant. The only way in which the defendant can be protected in his title to this property is by showing that he comes within the proviso which is at the conclusion of the subsection of the Bankruptcy Act quoted above-- that is, by showing that he was a 'bona fide purchaser for value' of the property in question, and that he 'acquired the same without notice or reasonable cause for inquiry' as to the insolvency of the bankrupt.

It has been held that the burden is upon the purchaser at such a sale to show that he comes within the terms of said proviso, and that, in order for his title to be protected, the duty is upon him to show that he is a bona fide purchaser for value, and that he acquired the property without notice of the insolvency of the bankrupt or reasonable cause for inquiry. 1 Remington on Bankruptcy, Sec. 1482, p. 883; Mencke v. Rosenberg, 9 Am.Bank.R. 323, 202 Pa. 131, 51 A. 767, 90 Am.St.Rep. 618.

It is not necessary, however, for this court to decide whether the burden of proof in this case was upon the defendant or upon the trustee, as the trustee assumed the burden of proof and introduced evidence tending to show that the defendant was not a bona fide purchaser for value, and that he acquired the property with full knowledge of the bankrupt's insolvency at the time of the sale. It is necessary, therefore, in order to decide the case, to thoroughly consider and analyze the evidence adduced at the hearing of the case, so as to determine...