In re Scruggs

• Decision Date: 19 May 1913
• Docket Number: 1,172.
• Citation: 205 F. 673
• Parties: In re SCRUGGS.
• Court: U.S. District Court — Southern District of Alabama

205 F. 673

In re SCRUGGS.

No. 1,172.

United States District Court, S.D. Alabama, Northern Division.

May 19, 1913

Keith &amp Wilkinson, of Selma, Ala., for trustee.

Pettus Fuller & Lapsley, of Selma, Ala., for Mrs. Ida B. Quarles.

TOULMIN District Judge.

This case is submitted on an agreed statement of facts with the lease given for the premises.

The statute of Alabama provides that:

'The landlord of any storehouse * * * or other building shall have a lien on the goods, furniture, and effects belonging to the tenant, * * * for the rent, which shall be superior to all other liens, except those for taxes. ' Code Ala. Sec. 4747.

And the construction of this statute is a matter for the state courts of Alabama. The Supreme Court of Alabama in considering this statute held that the lien attaches from the commencement of the tenancy for the security of the rent when it matures, and that it attaches for the whole rent for the entire term. Nicrosi v. Roswald, 113 Ala. 592, 21 So. 338; Shapiro v. Thompson, 160 Ala. 363, 49 So. 391. Under the provisions of this statute, the landlord has a lien for the rent for the entire term on the goods of the tenant which may be brought upon the premises at any time during the existence of the lease. The sale or removal of the property by the tenant from the premises during the term of the lease does not displace the lien of the landlord or affect his right to enforce his lien upon the property for the unpaid rent, unless in the hands of a bona fide purchaser for value without notice of the lien. In the case of Smith v. Huddleston, 103 Ala. 223, 15 So. 521, the Supreme Court of Alabama said: 'The lien (given by the statute) enters into and forms a part of every lease or contract as if' the terms of the statute were written into the lease.

And it is well settled that the trustee takes not as a bona fide purchaser for value, but as the bankrupt held the property, subject to all valid claims, liens, and equities. Collier on Bkcy. (9th Ed.) 996; In re Alden, 16 Am.Bankr.Rep. 362; Zartman v. First Nat. Bank of Waterloo, 216 U.S. 134, 30 Sup.Ct. 368, 54 L.Ed. 418. 'The validity of such claims, liens and equities is to be determined in the absence of federal statutes by the local law as evidenced by the decisions of the state courts. ' Thompson v. Fairbanks, 196 U.S. 516, 25 Sup.Ct. 306, 49 L.Ed. 577; Knapp v. Milwaukee Trust Co., 216 U.S. 545, 30 Sup.Ct. 412, 54 L.Ed. 610.

The Bankrupt Act recognizes and allows the priority of payment of 'debts owing to any person who by the laws of the states or of the United States is entitled to priority. ' Section 64b, Bankr. Act July 1, 1898, c. 541, 30 Stat. 563 (U.S. Comp. St. 1901, p. 3447). That act also provides that a discharge in bankruptcy is a release of a bankrupt from all of his debts which are provable in bankruptcy, with some exceptions which do not concern this case.

The federal courts have generally held that rent to accrue subsequent to the filing of the petition in bankruptcy is not provable in bankruptcy; that the only 'fixed liability' under a lease is the rent due at the time of filing the petition. The weight of authority is that rent on by the Supreme Court of the United States. But the United States Circuit Court of Appeals of this (Fifth) Circuit, in the case of Martin v. Orgain, 174 F. 772, 98 C.C.A. 246, held that where a lease gives the landlord a lien on property on leased premises for 'rent due or to become due,' and the statute gives a like lien for rent due and to become due, the lien for rent due for the remainder of the contract year in which the tenant was adjudicated a bankrupt is enforceable against his trustee.

The lease in the case at bar gives a lien on the goods, furniture, and effects on the leased premises, and the statute gives a like lien, and declares it shall be superior to all other liens. The lease is for the term of one year, the rent being payable monthly. The claim presented is for the rent due and to become due for the remainder of the rental year after the adjudication of the tenant a bankrupt. The trustee in answer to the claim alleged that it was not a provable claim, and prayed that the same should not be allowed. The material facts in this case and those in the case of Martin v. Orgain, 174 F. 772, 98 C.C.A. 246, are analogous, and the answer and contention made on the part of the trustee against the claim in this case is the same as that urged in Martin v. Orgain, supra.

The learned judge who wrote the opinion of the court in Martin v Orgain s...