In re Fellows

• Decision Date: 08 September 1930
• Citation: 43 F.2d 122
• Parties: In re FELLOWS.
• Court: U.S. District Court — Northern District of Oklahoma

43 F.2d 122 (1930)

In re FELLOWS.

District Court, N. D. Oklahoma.

September 8, 1930.

Floyd Rheam, of Tulsa, Okl., for petitioner.

H. E. Chambers, of Tulsa, Okl., for Anchor Loan Co.

KENNAMER, District Judge.

On the 26th day of August, 1930, Harry G. Fellows filed his voluntary petition in bankruptcy, and was duly adjudicated a bankrupt. The schedules attached to his petition listed the Anchor Loan Company, of Tulsa, Okl., as one of his creditors. Prior to the adjudication in bankruptcy, and on the 31st day of July, 1930, the bankrupt executed an assignment of his future wages to the Anchor Loan Company to secure the payment of the sum of $25. Subsequent to the adjudication of bankruptcy, and on the 28th day of August, 1930, the Anchor Loan Company caused to be served upon the employer of the bankrupt, British American Oil & Producing Company, the assignment of wages which had been executed by the bankrupt prior to the filing of his petition in bankruptcy and the adjudication thereon. The matter is before the court upon the verified petition of the bankrupt, by which it is charged that the Anchor Loan Company is attempting to collect the debt scheduled in bankruptcy, and seeking a restraining order against the loan company from collecting wages earned by the bankrupt subsequent to the adjudication in bankruptcy.

I am of the opinion that the prayer of the bankrupt's petition should be granted. Certainly, the adjudication in bankruptcy cut off the right of the bankrupt's creditors to enforce collection of his debts, and a discharge, if granted to the bankrupt, will discharge him of all of his debts, thus divesting the creditors of their rights to enforce collections, unless they have security for the payment of the debts, in which event they are relegated to their securities for payment. A discharge in bankruptcy when granted relates back to the date of adjudication. Collier on Bankruptcy (13th Ed.) vol. 1, § 17, subsec. d, p. 600; Bank of Elberton v. Swift (C. C. A.) 268 F. 305. Security for a debt, whether it be a mortgage, pledge, assignment, or any other form, is merely an incident to the debt or obligation; the debt or obligation is primary, and the security for its payment is incidental, having as its purpose the security and assurance for the payment. If there is no debt, the security is of no value or benefit to any but its owner, as it has no purpose to perform; the usual case being the payment of a secured debt, in which event the holder of the security has no further interest or equity in the security. In bankruptcy, the debt continues, but it is discharged and becomes unenforceable; rights attach to securities, and such rights may be enforced against the property of a bankrupt which are incumbered by contracts of security, as mortgages, assignments, etc. However, before any rights may attach, there must be in existence some property or thing which is subject to and incumbered by the contract for security. An assignment of unearned wages to secure the payment of a dischargeable debt creates no lien until the wages have been earned; and cannot be enforced as to wages earned after the date of adjudication. The assignment of wages operates and becomes effective as the...