In re Mossler Co.

• Decision Date: 02 January 1917
• Docket Number: 2343.
• Citation: 239 F. 262
• Parties: In re MOSSLER CO. v. CENTRAL TRUST CO. OF ILLINOIS. CHICAGO TITLE & TRUST CO.
• Court: U.S. Court of Appeals — Seventh Circuit

239 F. 262

In re MOSSLER CO.

CHICAGO TITLE & TRUST CO. v. CENTRAL TRUST CO. OF ILLINOIS.

No. 2343.

United States Court of Appeals, Seventh Circuit.

January 2, 1917

[Copyrighted Material Omitted]

Julius Moses, of Chicago, Ill., for appellant.

Clarence J. Silber, of Chicago, Ill., for appellee.

Before MACK, ALSCHULER, and EVANS, Circuit Judges.

MACK Circuit Judge.

Appellant assignee of a lessor, levied a distress warrant four days before a petition in bankruptcy was filed against the lessee which was insolvent at and after the levy. The lease contained the following provision:

'Said party of the second part further covenants and agrees that said party of the first part, or the representatives or assigns of said party, shall have, at all times, the right to distrain for rent due, and shall have a first and valid lien upon all personal property of said party of the second part, which they now have or own or may hereafter acquire or have an interest in, whether exempt by law or not, as security for the payment of the rent herein reserved.'

Subsequently by agreement the goods were sold and lien, if any, transferred to the proceeds. Thereupon appellant filed its petition for payment in full out of the proceeds. The answer denied that appellant was entitled thereto.

The matter was heard on a stipulation of facts; the order of the referee, denying payment in full and allowing only a general claim, was affirmed by the District Judge.

1. In Re Robinson and Smith, 154 F. 343, 83 C.C.A. 121, this court held that the lien obtained within four months of bankruptcy under a distress warrant, levied pursuant to an express grant of such a right in and by the lease, was not obtained through legal proceedings, and, unlike the levy made solely by virtue of the statutory right to distrain, as in United Motors Chicago Company, 220 F. 772, 136 C.C.A. 378, was not to be dissolved under Bankruptcy Act, Secs. 67d and 67f. We adhere to that decision for the reasons therein stated.

2. The nature of the right created by the distress and lien clauses of this lease is governed by Illinois law. In Illinois neither an administrator (Sumner v. McKee, 89 Ill. 127), nor an assignee in insolvency (Hooven v. Burdette, 153 Ill. 672, 39 N.E. 1107), stands in any better position than the decedent or assignor respectively, as against one holding a lien, legal or equitable, vested or inchoate; a mortgage or vendor's reserved title, good as against the one, is held to be equally valid as against the other. In re Sturtevant, 188 F. 196, 110 C.C.A. 68.

If, then, in such a lease, the distress or lien clause of itself created any lien or equity, vested or inchoate, it would be enforceable as against the lessee's administrator in possession of the property. But the decision in Borden v. Croak, 131 Ill. 68, 22 N.E. 793, 19 Am.St.Rep. 23, in favor of the administrator necessarily determines that in Illinois, unlike Georgia (Henderson v. Mayer, 225 U.S. 631, 32 Sup.Ct. 699, 56 L.Ed. 1233), no such lien or equity is thereby created. The clauses in the Borden lease were similar to those involved in this case, except that here after-acquired property was expressly included. Under that decision, it is clear that, until possession was taken, the lease, as a chattel mortgage or equitable lien, was without efficacy because of the indefiniteness of the property sought to be covered thereby.

3. Furthermore, as such a lease, by including all property covers stock in trade, which the lessee impliedly has the right to dispose of as it pleases, it must be deemed...