In re Loveland

• Decision Date: 13 February 1907
• Docket Number: 675,676.
• Parties: In re LOVELAND. In re LITTLEFIELD. PUTNAM v. LOVELAND.
• Court: U.S. Court of Appeals — First Circuit

155 F. 838

In re LOVELAND. In re LITTLEFIELD. PUTNAM v. LOVELAND.

Nos. 675, 676.

United States Court of Appeals, First Circuit.

February 13, 1907

Charles F. Hall and Arthur W. Blakemore, for petitioner.

George Chandler Coit, for trustee.

Before COLT, PUTNAM, and LOWELL, Circuit Judges.

LOWELL Circuit Judge.

On July 14th Littlefield, the bankrupt, mortgaged real estate to Hall for $6,000, payable in five years. Note and mortgage were in the usual form. Payment of interest to July 14, 1905, was duly made and indorsed on the note, as were sundry payments of principal, the last in 1899 amounting in all to $4,800. Hall died before October 1, 1901, and on that day Littlefield borrowed from Hall's estate $3,500. The following indorsement was then made on the note:

'Boston October 1, 1901.

'I have this day borrowed of the estate of Joseph E. Hall the sum of $3500, making the amount of the principal of this note the sum of $4700.

'Warren H. Littlefield.'

On July 26, 1902, Littlefield borrowed $1,300 more, and a corresponding indorsement was made. Littlefield was adjudged bankrupt October 16, 1905, on a creditor's petition filed September 27th.

Thereafter the trustee in bankruptcy filed a petition with the referee, praying for leave to sell the real estate free from the incumbrance of the mortgage. The referee ordered a sale for not less than $7,500, which sum was to be deposited in a separate account to meet the claims of the mortgagee, Hall's administratrix. This order was affirmed by the district judge, and the mortgagee has filed in this court an original petition to revise the order of the District Court in matter of law. This is the question presented in No. 675.

Beside these proceedings, and without prejudice thereto, the mortgagee filed a petition with the referee, asking that her lien be satisfied from the proceeds of the sale. The referee ruled that the lien of the mortgage was valid only to the extent of $1,200 and interest, but the learned district judge held it valid for $6,000 and interest, and from his decree the trustee took an appeal to this court. This is the question presented in No. 676.

The petition for revision is easily disposed of. The court of bankruptcy has jurisdiction to order a sale of the estate of the bankrupt upon which a lien is asserted, without first determining either the validity or amount of the lien. In re Union Trust Co., 122 F. 937, 59 C.C.A. 461; Mason v. Wolkowich (decided by this court October 9, 1906) 150 F. 699; Marion E. Tucker, Petitioner (decided October 31, 1906) 153 F. 91. The petition for revision, therefore, must be dismissed with costs for the respondent.

We pass to the question presented by the appeal. It will be convenient to set out certain statutes of Massachusetts and certain sections of the bankrupt act which have been supposed to be material.

Rev. Laws, Mass. c. 127, Sec. 4:

'A conveyance of an estate in fee simple, fee tail or for life, or a lease for more than seven years from the making thereof, shall not be valid as against any person, except the grantor or lessor, his heirs and devisees and persons having actual notice of it, unless it, or an office copy as provided in section fifteen of chapter twenty-two, is recorded in the registry of deeds for the county or district in which the land to which it relates is situated.'

Mass. Rev. Laws, c. 163, Sec. 37:

'A mortgage of land recorded more than four months after its date shall not be valid against an assignee of the estate of the mortgagor if proceedings in insolvency are commenced within one year from the recording of such mortgage.'

Bankr. Act July 1, 1898, c. 541, Sec. 67a, 30 Stat. 564 (U.S. Comp. St. 1901, p. 3449):

'Claims which for want of record or for other reasons would not have been valid liens as against the claims of the creditors of the bankrupt shall not be liens against his estate.'

Bankr. Act, Sec. 70a (5):

'The trustee of the estate of a bankrupt * * * shall * * * be vested by operation of law with the discharge of the bankrupt * * * to all (5) property which prior to the filing of the petition he could by any means have transferred or which might have been levied upon and sold under judicial process against him.'

Where the trustee in bankruptcy and a transferee of the bankrupt both claim certain property which once belonged to the bankrupt, it may be difficult to decide how far the title to the property in question depends upon the state law which determines the effect of the bankrupt's conveyance, and how far upon the bankrupt act which declares what property the trustee shall take. The one law regulates the passage of title from the bankrupt, and is interpreted by the state court. The other law regulates its passage to the trustee, and is interpreted by the federal court. Concerning the questions raised in the case at bar both courts have reached the same conclusion.

That the payment made on the mortgage operated pro tanto to discharge it at law is not disputed. No oral agreement, and indeed, nothing but a deed duly executed, could thereafter make the mortgage valid in a court of law as security for a sum larger than the balance left due upon it. But in Upton v. National Bank of South Reading, 120 Mass. 153, where the mortgagor and mortgagee had attempted by...