In re Darwin

• Decision Date: 08 July 1902
• Docket Number: 1,062.
• Citation: 117 F. 407
• Parties: In re DARWIN.
• Court: U.S. Court of Appeals — Sixth Circuit

117 F. 407

In re DARWIN.

No. 1,062.

United States Court of Appeals, Sixth Circuit.

July 8, 1902

Burket Miller & Mansfield, for Carney Bros.

A. P Haggard, for trustee.

The case was submitted on the following facts: On October 24 1893, Carney Bros. recovered judgment against John Gollahon the bankrupt, in the supreme court at knoxville, Tenn., for the sum of $216.85 and costs, amounting to $33.66. An alias execution on this judgment was issued by the clerk of the supreme court September 6, 1900, tested the first day of the preceding term, to wit, the second Monday in September, 1899, which came to the hands of the sheriff of Rhea county, Tenn., on September 7, 1900, and was by him levied September 8, 1900, on a stock of merchandise belonging to the bankrupt. This levy, and another one subsequently levied, precipitated the bankruptcy of Gollahon, who filed the petition the same day, but a few hours later, and was adjudged a bankrupt herein on the 10th day of September, 1900. This stock of merchandise so levied on was taken from the custody of the sheriff of Rhea county, he having seized it in making said levy, and turned over to a temporary receiver on the order of the court in which said bankruptcy proceedings were instituted (the United States district court at Chattanooga), and was subsequently, on September 22, 1900, under a similar order of said court, turned over to a trustee in bankruptcy, who converted same into cash. The judgment creditors, Carney Bros., in a proper manner herein, asserted a prior claim on the stock of goods at the time of the bankruptcy proceedings by virtue of the levy of said execution, and which levy they claimed was unaffected by such bankruptcy and asked that said judgment, with interest and cost, be paid in full to the extent of the property seized under said execution, and subsequently by the bankruptcy trustee converted into cash. The merchandise so levied on by the sheriff was of value sufficient to have paid Carney Bros.' debt and all costs, and was by the trustee sold for a cash sum sufficient for this purpose, but insufficient to pay all his debts; and such cash is now in the trustee's hands. The sheriff made his official return of said execution, showing therein the costs and commission of the sheriff, including protection to the merchandise while holding it under his levy, to be $19.04. The bankrupt was insolvent on the day of the levy of said execution, and had been for several months previous (more than four months). Petitioners, Carney Bros., knew nothing of this, however, and the said Gollahon had been, and was at the time of the levy, merchandising at retail, until his stock was seized and his store closed by the sheriff. He acquired the stock of goods on which the execution was levied about 60 days prior to his adjudication in bankruptcy, and had been selling same at retail ever since. He had an interest in a stock of merchandise in an adjoining county at a date more than four months before the filing of the petition, and owned same until some three months before such filing, when he sold it for a note for $600, all of which he used as collateral in purchasing a part of the stock of goods levied on under said execution. Upon the foregoing facts the referee refused to allow priority to the judgment creditors, Carney Bros., holding that the lien and levy of the execution was avoided by the bankruptcy proceedings, and on petition of said judgment creditors the facts and question of priority were certified to the district judge, who reversed the ruling of the referee, and made an order for the payment of the aforesaid judgment, interest, and costs in full.

Before LURTON, DAY, and SEVERENS, Circuit Judges.

DAY,...