Matter of Tinsley, Bankruptcy No. 75-83-Ath.

• Decision Date: 29 October 1976
• Docket Number: Bankruptcy No. 75-83-Ath.
• Citation: 421 F. Supp. 1007
• Parties: In the Matter of James N. TINSLEY.
• Court: U.S. District Court — Middle District of Georgia

421 F. Supp. 1007

In the Matter of James N. TINSLEY.

Bankruptcy No. 75-83-Ath.

United States District Court, M. D. Georgia, Athens Division.

October 29, 1976.

John S. Noell, Jr., Edward D. Tolley, Cook, Noell, Bates & Warnes, Athens, Ga., for appellants.

Richard M. Nichols, Macon, Ga., for appellee.

OWENS, District Judge:

The question in this bankruptcy appeal is whether under Georgia law a creditor who records an execution on his superior court judgment against the bankrupt after it is affirmed on appeal acquires a lien as of the date of the trial court judgment or as of the date of its filing for recording. The problem arises because section 67(a)(1)¹ of the Bankruptcy Act makes "null and void every lien . . . obtained by attachment, judgment, levy, or other legal or equitable process or proceedings within four months before the filing of a petition" initiating bankruptcy proceedings if the bankrupt was insolvent when the lien was obtained or if the lien was obtained in fraud of the Bankruptcy Act. In the present case, appellants Beeler and Roush obtained a superior court judgment on May 30, 1974, well over a year prior to the bankrupt's voluntary petition; however, the judgment was appealed, and execution was not issued and entry of execution made on the General Execution Docket, until April 9, 1975, the day after the judgment was affirmed on appeal — less than two months before the bankruptcy petition was filed on June 5, 1975.

The bankruptcy judge ruled:

"The judgment lien of John A. Roush and Glover G. Beeler, Jr. was perfected on April 9, 1975, within four (4) months of the filing by the bankrupt of a petition initiating a proceeding under the Bankruptcy Act, and such lien is null and void as against the property of . . . the bankrupt."

Appellants argue that the bankruptcy judge erred in voiding their lien because it dates from the entry of their original judgment and, in any event, because no finding was made that the bankrupt was insolvent or that the lien was fraudulently obtained.

Under section 67a, state law determines when, how, and on what a judgment becomes a lien. See 4 Collier on Bankruptcy, ¶ 67.08. At least since the first codification of the statutes in 1861,² Georgia law has provided that a creditor acquires a lien against a defendant as soon as he obtains a judgment:

"All judgments obtained in the superior, justices', or other courts of this State shall be of equal dignity, and shall bind all the property of the defendant, both real and personal, from the date of such judgment, except as otherwise provided in this Code." Ga.Code Ann. § 110-507. (1863 Ga.Code § 3499).

With respect to the effect of an appeal from such a judgment, the statutes provide that the judgment is suspended upon the entering of an appeal, Ga.Code Ann. § 110-303 (1863 Ga.Code § 3488), but that such suspension is not to affect the creditor's rights:

"A judgment in the superior court, which is taken to the Supreme Court or Court of Appeals and affirmed, loses no lien or priority by the proceeding in the appellate court, but takes effect from the first judgment." Ga.Code Ann. § 110-506 (1863 Ga.Code § 3498).

In dealing with similar provisions providing for the suspension of a justices' court judgment pending appeal to a superior court, the Supreme Court of Georgia held in Watkins v. Angier, 99 Ga. 519, 27 S.E. 718 (1896), that the lien of an affirmed judgment "by relation attached to the property of the defendant as of the date appealed from, and was, therefore, superior in point of dignity to a judgment rendered in the superior court" subsequent to the trial court judgment but prior to its affirmance. Id. at 523, 27 S.E. at 720.

The Watkins v. Angier court did not consider an 1889 law providing for the entry of judgment executions on the General Execution Docket. 1889 Ga.Laws 106, codified at 1895 Ga.Code §§ 2778-85; 1910 Ga.Code §§ 3320-26; Ga.Code Ann. §§ 67-2501, 67-2503, 39-701 to 39-707. As now applicable, the law provides:

". . . As against the interest of third parties acting in good faith and without notice, who may have acquired a transfer or lien binding the defendant's property, no money judgment obtained within the county of defendant's residence, in any court of this State, whether superior court, probate court, county court, city court, or justice court, or United States court in this State, municipal court or other courts, shall have a lien upon the property of the defendant, unless the execution issuing thereon shall be entered upon the general execution docket. Ga.Code Ann. § 39-701.

Under this statute, it would seem that the creditors' lien becomes effective only upon the entry of execution on the general execution docket. Case law, however, requires an opposite conclusion.

Construing this statute in 1896, the Supreme Court of Georgia in Griffith v. Posey, 98 Ga. 475, 25 S.E. 515 (1896) concluded that the statute protected only persons who acquired a contractual lien subsequent to a judgment and held that an older, unrecorded judgment would prevail over a later judgment which had been recorded. The court flatly stated that "the act in question has no application to contests between ordinary common law judgments." Id. at 476, 25 S.E. at 515. Thus, except where subsequent bona fide purchasers are concerned, the 1889 recording statute left intact the principle that a common law judgment is a lien upon rendition of judgment.

The statute was further considered in Crosby v. King Hardware Co., 109 Ga. 452, 34 S.E. 606 (1899). At that time the statute provided that the lien of a judgment would date from entry of execution on the general execution docket unless it was entered within ten days of judgment; if entered within ten days, it would be effective from the date of judgment. In Crosby, King Hardware obtained a judgment against one Dunn on June 29, 1896 in the county court which was appealed to the superior court. On November 11, 1896, Dunn conveyed property to Crosby. After its judgment was affirmed by the superior court on March 5, 1897, King Hardware sought to levy on the property conveyed to Crosby. In deciding the controversy between the judgment creditor and the purchaser, the court began by observing that the appeal had been filed before the expiration of the ten day period for execution to be entered on the general execution docket and that, because the appeal operated as a supersedeas, the ability of King Hardware to obtain and file execution on its judgment was eliminated when the appeal was filed. Reasoning that "no loss must be allowed to fall upon the plaintiff in execution simply because he failed to do what he might have done but what he was under no legal obligation to do," the court held that the lien dated from the rendition of the original county court judgment:

"The judgment of the county court is a lien upon the property of the defendant, and this lien is not discharged by the entering of an appeal, but is merely suspended, and the judgment entered on the appeal is a lien upon property of the defendant, and is to be treated as being of the date when the judgment appealed from was entered." Id. at 453, 34 S.E. at 607.

The authorities above reviewed support the creditors' position that they acquired a lien on the date they obtained judgment, notwithstanding the fact that execution was not issued and entered on the general execution docket until after the judgment was affirmed. While that position is correct with respect to a lien on personal property, later statutes provide an opposite result for liens on real property.

In 1939, in enacting a lis pendens statute, the legislature provided that:

". . . No judgment, execution, or attachment shall bind the property of the defendant or defendants, as against the interest of third parties acting in good faith and without notice, where no notice of Lis Pendens as hereinbefore required has been filed . . .

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