In re Biddle

• Decision Date: 09 May 1925
• Docket Number: 2333.,No. 2332,2332
• Parties: In re BIDDLE. HART et al. v. DAIL et al. (two cases).
• Court: U.S. Court of Appeals — Fourth Circuit

5 F.2d 316 (1925)

In re BIDDLE.

HART et al. v. DAIL et al. (two cases).

Nos. 2332, 2333.

Circuit Court of Appeals, Fourth Circuit.

May 9, 1925.

R. A. Nunn and Larry I. Moore, both of New Bern, N. C. (Moore & Dunn, of New Bern, N. C., on the brief), for petitioners and appellants.

T. D. Warren and R. E. Whitehurst, both of New Bern, N. C., for respondents and appellees.

Before WOODS, WADDILL and ROSE, Circuit Judges.

ROSE, Circuit Judge.

One J. W. Biddle, hereinafter called the bankrupt, upon his petition filed on the 30th of December, 1922, was on that day adjudged a bankrupt. More than two years before or, to be precise, on September 20, 1920, he had without consideration conveyed to his wife a farm with intent to hinder, delay, and defraud his creditors. On the 4th of April 1921, the petitioners and appellants, H. A. Hart & Bro., hereinafter spoken of as the Harts, issued a summons, and on the 21st of the same month filed a complaint against the bankrupt and his wife in the state court of Craven county, N. C., alleging that the conveyance of the farm was void under the statute of the 13th of Elizabeth. They asked that it be set aside as to them and as to other creditors, for a judgment for their debt, and that pendente lite the defendants should be enjoined from conveying or encumbering the land in question. Such an injunction was issued on May 6, 1921, and served upon the defendants twelve days later. On October 2, 1922, and therefore within less than four months before the bankruptcy, a decree was entered in favor of the Harts for $10,816.86. It set aside the conveyance generally as fraudulent. At various dates, subsequent to the 4th of April, 1921, and prior to October 2, 1922, various other creditors, now respondents and appellees, recovered ordinary money judgments against the bankrupt. After the adjudication and by consent of all concerned, the farm involved in the state court litigation was taken possession of by the trustee in bankruptcy, and has been, or is to be, sold by him and the proceeds paid to the creditors in accordance with the findings of the bankruptcy court as to their respective priorities.

There is but one question in the case, and that turns on the law of the state: Does the lien of the Harts upon the farm date from the institution of their proceedings to set aside the conveyance to the bankrupt's wife, or only from the date at which decree was entered? If they obtained a lien as early as April 4, 1921, not only is it unaffected by the filing of the petition in bankruptcy 20 months later, but it is prior in time and therefore is right to the lien of the judgment subsequently acquired by the other creditors. Moore v. Green, 145 F. 472, 76 C. C. A. 242 (C. C. A. 4th Ct.). On the other hand, if the Harts had no lien until the entry of the decree in their favor on the 2d of October, 1922, it is junior to judgment held by the other creditors.

It would seem to be clearly settled in North Carolina that such a bill as that filed by the Harts is what is there ordinarily called a judgment creditor's, as distinguished from a general creditor's, bill. Hancock v. Wooten, 107 N. C. 9, 12 S. E. 199, 11 L. R. A. 466. That case said that the former...