In re Consolidated Container Carriers, Inc.

• Decision Date: 27 May 1966
• Docket Number: No. 28992.,28992.
• Citation: 254 F. Supp. 605
• Parties: In the Matter of CONSOLIDATED CONTAINER CARRIERS, INC.
• Court: U.S. District Court — Eastern District of Pennsylvania

254 F. Supp. 605

In the Matter of CONSOLIDATED CONTAINER CARRIERS, INC.

No. 28992.

United States District Court E. D. Pennsylvania.

May 27, 1966.

Meyer E. Maurer, Wexler, Mulder & Weisman, Philadelphia, Pa., for trustee.

George J. O'Neill, Dechert, Price & Rhoads, Philadelphia, Pa., for respondent.

OPINION

JOHN MORGAN DAVIS, District Judge.

An involuntary petition in bankruptcy was filed on August 10, 1965, praying that Consolidated Container Carriers, Inc. be adjudged bankrupt. On March 12, 1965, over four months prior to the filing of the bankruptcy petition, Acme Fast Freight, Inc. had commenced an assumpsit action against Consolidated Carriers, Inc. by means of a writ of foreign attachment in the Court of Common Pleas of Philadelphia County. By this procedure the $6375.15 bank account in the debtor's name in the Continental Bank and Trust Company was attached. As of August 10, 1965, when the bankruptcy proceedings were instituted, Acme had not obtained a judgment in its suit in the Pennsylvania courts. The Referee held that the bankruptcy court had summary jurisdiction of the bank account but allowed Acme to seek review here.

The question now presented is whether the bankruptcy court has summary jurisdiction over the bank account of a debtor where a creditor, more than four months prior to the filing of the bankruptcy petition has commenced an action against the debtor in a state court by means of a writ of foreign attachment against that asset but where no judgment had yet been obtained as of the time of the filing of the petition.

Section 67(a) (1) of the Bankruptcy Act, 11 U.S.C. § 107 provides in part:

"Every lien against the property of a person obtained by attachment, judgment, levy, or other legal or equitable process or proceedings within four months before the filing of a petition initiating a proceeding under this title by or against such person shall be deemed null and void (a) if at the time when such lien was obtained such person was insolvent or (b) if such lien was sought and permitted in fraud of the provisions of this title * * *."

Since the writ of foreign attachment was executed more than four months prior to the commencement of the bankruptcy proceedings, the time element is not a contested matter here. Rather, the issue narrows itself to whether Acme had a lien within the meaning of the statute when it filed the writ of foreign attachment. It is argued that if Acme's interest in the bank account does not have the status of a lien, the $6375.15 will come within the summary jurisdiction of the bankruptcy court.

To answer this issue, the court must first determine the legal incidents of a writ of foreign attachment under the law of Pennsylvania. We then must decide whether these attributes come within the definition of a lien as a matter of federal bankruptcy law. 4 Collier, Bankruptcy § 67.07; Mussman & Riesenfeld, "Garnishment and Bankruptcy" 27 Minn.L.Rev. 1 (1942).

The purpose of the writ of foreign attachment in this Commonwealth is to attach the property of an out-of-state defendant in order to satisfy a possible judgment against him and also to compel his appearance. See Alpers v. New Jersey Bell Telephone Co., 403 Pa. 626, 170 A.2d 360 (1961); Pennsylvania R. Co. v. Pennock, 51 Pa. 244 (1866); Marano v. Granata, 151 Pa.Super. 454, 30 A.2d 243 (1943); 10 Standard Pa.Practice (Rev) Ch. 42 §§ 1-2; Pa.Rules Civil Proc. rules 1251-1279, 1285-1292, 12 P.S.Appendix. "It is tantamount to an involuntary dispossession of the defendant prior to any adjudication of the rights of the plaintiff —an execution, so to speak, in advance of trial and judgment." 10 Standard Pa. Practice, supra § 2.

There is no question that the law of Pennsylvania deems attached property outside the possession or control of the defendant and in custodia legis. This status exists from the moment that the writ is served on the garnishee or the assets are seized by the Sheriff. See Clement v. Courtright, 9 Pa.Super. 45 (1898); 10 Standard Pa.Practice §§ 127, 301-03.

We are satisfied that a Pennsylvania writ of foreign attachment is a lien within the meaning of the Bankruptcy Act. While our research has uncovered no other case that has construed this particular Pennsylvania writ for bankruptcy purposes, the cases are legion which hold that attachment liens of a similar nature remain immune to the jurisdiction of the bankruptcy court if they existed more than four months prior to the institution of the bankruptcy. Straton v. New, 283 U.S. 318, 51 S.Ct. 465, 75 L.Ed. 1060 (1931); Henderson v. Mayer, 225 U.S. 631, 32 S.Ct. 699, 56 L.Ed. 1233 (1912); Metcalf v. Barker, 187 U.S. 165, 23 S.Ct. 67, 47 L.Ed. 122 (1902); Irby v. Corey, 95 F.2d 963 (5th Cir. 1938); Piedmont Coal Co. v. Hustead et al., 294 F. 247, 32 A.L.R. 556 (3d Cir. 1923); Tennessee Producer Marble Co. v. Grant, 135 F. 322 (3d Cir. 1905); 4 Collier, Bankruptcy §§ 67.04, 67.07 (see cases cited therein).

This immunity remains even though the attachment lien has not been reduced to final judgment prior to the crucial four month period. 4 Collier, Bankruptcy, §§ 67.07; 5 Remington Bankruptcy § 2070. In Henderson v. Mayer, supra, the Supreme Court was faced with the question whether the bankruptcy court had jurisdiction over property on which the debtor's landlord had a general statutory lien for the payment of rent, a lien which covered no specific property and attached "only to what is seized under the distress warrant issued to enforce the lien given by statute." Henderson v. Mayer, supra, 225 U.S. at 638, 32 S.Ct. at 701. The court stated that the landlord's lien was preserved from the hands of the trustee in bankruptcy "even where the registration, foreclosure, or levy necessary to their completion or enforcement was within four months of the filing of the petition in bankruptcy." Henderson v. Mayer, supra, 225 U.S. at 637, 32 S.Ct. at 701.

In Metcalf v. Barker, supra, the Supreme Court dealt with the effect of a "lien created by a judgment creditor's bill" in New York where the final decree in favor of the plaintiff was not handed down until after bankruptcy proceedings had commenced. This lien, very similar to a writ of foreign attachment, was "contingent in the sense that it might possibly be defeated by the event of the suit, but in itself, and so long as it exists, it is a charge, a specific lien, on the assets, not subject to being divested save by payment of the judgment sought to be collected." The Court asserted at p. 174 of 187 U.S., at p. 71 of 23 S.Ct.:

"* * * where the lien is obtained more than four months prior to the filing of the petition, it is not only not to be deemed to be null and void on adjudication, but its validity is recognized. When it is obtained within four months the property is discharged therefrom, but not otherwise. A judgment or decree in enforcement of an otherwise valid pre-existing lien is not the judgment denounced by the statute, which is plainly confined to judgments creating liens."

Likewise in Straton v. New, supra, the Supreme Court, following Metcalf v. Barker, supra, stated at p. 326, n. 6 of 283 U.S., at p. 468 of 51 S.Ct.:

"It is also well settled that where an attachment is levied more than four months prior to bankruptcy, the prosecution of

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