IN RE AVLON SYRUP CORPORATION

• Decision Date: 26 March 1928
• Citation: 25 F.2d 342
• Parties: In re AVLON SYRUP CORPORATION.
• Court: U.S. District Court — Northern District of New York

25 F.2d 342 (1928)

In re AVLON SYRUP CORPORATION.

District Court, N. D. New York.

March 26, 1928.

Naylon, Robinson, Maynard & Bates, of Schenectady, for petitioner.

Thomas R. Tillott, of Schenectady, for trustee.

COOPER, District Judge.

This is a proceeding by the petitioner in reclamation proceedings, the Pfaudler Company, to review the decision of a referee in bankruptcy, denying its right to reclaim three syrup tanks from the trustee. The facts are as follows:

On May 4, 1925, the Pfaudler Company entered into two conditional sales contracts with the bankrupt for the sale of the three tanks in question. The purchase price was $2,220, and was payable in installments ranging from June 28 to November 20, 1925. No part of the purchase price has been paid. The petitioner did not file its conditional sales contracts until December 21, 1925. Before this date, several persons, firms, or corporations obtained judgments against the bankrupt.

One Clifton Williams recovered judgment against the bankrupt on October 23, 1925, and execution was issued on October 29, 1925. S. Morrison & Son recovered judgment November 20, 1926. It does not appear whether execution was issued or not, but, if issued, it must have been issued within a few days thereafter. The Daily Gazette Company docketed judgment on October 15, 1925, and execution was issued shortly thereafter and returned unsatisfied. Various other persons recovered judgments between September 18, 1925, and November 27, 1925. It does not appear whether executions on these other judgments were issued or not; but, if issued, the return days expired before the filing of the petition in bankruptcy here. It does not appear that a levy was made under any of the executions issued upon the aforesaid judgments or any of them, and no sale under execution was ever made. The petition in bankruptcy was filed February 18, 1926, and the trustee was appointed on March 15, 1926. Creditors filed claims in the bankruptcy proceedings totaling $18,911, including the aforesaid judgments.

Section 65 of the Personal Property Law of New York provides:

"Every provision in a conditional" contract of "sale reserving property in the seller shall be void as to any * * * creditor * * * who * * * acquires by attachment or levy a lien upon them, the goods before the contract or a copy thereof shall be filed. * * *"

The referee held that under section 679 of the Civil Practice Act the issue of these executions created liens upon the property of the corporation, within the meaning of section 65, which were continuing liens and superior to the conditional contracts of sale when filed, although no actual levy was ever made, and also that, under the amendment of 1910 to section 47a of the Bankruptcy Law (11 USCA § 75 a) the trustee was vested with all the rights, remedies, and powers of a creditor holding a lien by legal or equitable proceedings upon the bankrupt's property, and could hold the property under that section also.

The referee was in error. It may well be doubted whether a creditor who has only such a lien as arises under section 679 from the mere issue of the execution is a creditor who "acquires by attachment or levy a lien" within the meaning of section 65 of the Personal Property Law. This court is of the opinion that he is not. But, however that may be, the trustee cannot succeed under the facts of this case, even if it be held that a lien under section 679 (Civil Practice Act) satisfied the requirements of a lien under section 65. The lien arising from the issuance of the execution exists only during the statutory period of sixty days within which the sheriff must make his levy or return the execution unsatisfied. If a levy is made within the sixty days, the lien exists thereafter, not by issuance of the execution, but solely by virtue of the levy under the execution. The former lien, which may be called a constructive lien, may be said to merge into the later greater, actual lien arising from the levy made under authority of the execution.

As before stated, no levy was made under any of these executions. As far as appears, all the executions were issued and returned unsatisfied before the conditional sales contracts were filed. The liens expired at the expiration of the sixty days or at the earlier return of the execution unsatisfied. A levy could not have been made after the expiration of the sixty-day period. Walker v. Henry, 85 N. Y. 130, 135; Hathaway v. Howell, 54 N. Y. 97.

The liens arising from the issue of the executions having expired without a levy, whether before or after the filing of the conditional contracts of sale is immaterial, the status of the...