Mitchell v. Ada Inv. Co.

• Decision Date: 28 April 1926
• Citation: 42 Idaho 421,246 P. 10
• Parties: FRED MITCHELL, Trustee in Bankruptcy of WALTER R. SEBREE, Respondent, v. ADA INVESTMENT COMPANY, a Corporation, Appellant
• Court: Idaho Supreme Court

246 P. 10

42 Idaho 421

FRED MITCHELL, Trustee in Bankruptcy of WALTER R. SEBREE, Respondent, v. ADA INVESTMENT COMPANY, a Corporation, Appellant

Supreme Court of Idaho

April 28, 1926

APPEAL from the District Court of the Seventh Judicial District, for Canyon County. Hon. Ed. L. Bryan, Judge.

Action to have the lien of an attachment declared void. Judgment for plaintiff. Reversed.

Judgment reversed. Costs to appellant.

Richards & Haga, for Appellant.

A trustee in bankruptcy has only the rights, remedies and powers of a lien creditor as of the date of the filing of the petition in bankruptcy, and no more. (Sec. 472, cl. 2, 1 F Stats. Ann., p. 933; Bailey v. Baker Ice Machine Co., 239 U.S. 268, 36 S.Ct. 50, 60 L.Ed. 275; Acme Harvester Co. v. Beekman Lbr. Co., 222 U.S. 300, 32 S.Ct. 96, 56 L.Ed. 208; Fairbanks Steam Shovel Co. v Wells, 240 U.S. 642, 36 S.Ct. 466, 60 L.Ed. 841; Reeves v. York etc. Co., 249 F. 513.)

It is only a lien obtained within four months of the filing of the petition in bankruptcy that may be avoided by a trustee in bankruptcy and all liens prior thereto are expressly recognized and protected by the Bankruptcy Act. (Sec. 67f, 1 F. Stats. Ann., p. 1130; Metcalf Brothers v. Barker, 187 U.S. 165, 23 S.Ct. 67, 47 L.Ed. 122; In re Blair, 108 F. 529; In re Crafts-Riordan Shoe Co., 185 F 931.)

Where an attachment lien is obtained more than four months prior to the filing of a petition in bankruptcy, even though the judgment or decree is obtained within such period, it cannot be attacked by a trustee in bankruptcy, unless absolutely void, such judgment or decree so made within the four months' period creating no new lien but merely sustaining and affirming the attachment lien. (In re Beaver Coal. Co., 113 F. 889, 51 C. C. A. 519; In re Crafts-Riordan Shoe Co., supra; In re Kavanaugh, 99 F. 928; In re Schow, 213 F. 514; In re Kerby v. Dinnis, 95 F. 114; Blair v. Brailey, 221 F. 1, 136 C. C. A. 524; Thompson v. Fairbanks, 196 U.S. 516, 25 S.Ct. 306, 49 L.Ed. 577.)

C. S., sec. 6780, provides for the issuance of a writ of attachment in two distinct classes of cases, one where the payment of an indebtedness was unsecured and the other where originally secured and the security has become valueless, and the affidavit provided for each class is different, and neither class is required to state facts required for the other class, so that in the second class where the indebtedness was originally secured it is not necessary to negative security as required in the case of the first class of attachment. (Farmers' State Bank v. Gray, 36 Idaho 49, 210 P. 1006; Knutsen v. Phillips, 16 Idaho 267, 101 P. 596; Heaton v. Panhandle Smelting Co., 32 Idaho 146, 179 P. 510; Vollmer v. Spencer, 5 Idaho 557, 51 P. 609.)

Attachment proceedings are not void because the affidavit upon which they are based is false in fact, unless the same appears. upon the face of the record of such attachment proceedings. (Van Fleet, Collateral Attack, sec. 532; Lovier v. Gilpin, 6 Dana, 321, 36 Ky. 478; Harrison v. Pender, 44 N.C. 78, 57 Am. Dec. 573; Gooden v. Lewis, 101 Kan. 482, 167 P. 1133.)

Where jurisdiction to act in one proceeding is attacked in another proceeding, such jurisdiction always depends upon the allegations and not upon the facts. The truth of the allegations does not constitute jurisdiction; it must be necessarily determined from the allegations, assuming them to be true. (Waples, Attachment, p. 28; Van Fleet, Collateral Attack, secs. 60, 532, pp. 5, 29; Stuart v. Allen, 16 Cal. 473, 76 Am. Dec. 551; Richardson v. Butler, 82 Cal. 174, 16 Am. St. 101, 23 P. 9; Darling v. Conklin, 42 Wis. 478; Beebee v. Pyle, 1 Abb. N.C. 412; Fitch v. Miller, 20 Cal. 352; Dennis v. Crittenden, 42 N.Y. 542; Electric Plaster Co. v. Blue Rapids City, 81 Kan. 730, 106 P. 1079, 25 L. R. A., N. S., 1237; Murphy v. Montandon, 3 Idaho 325, 35 Am. St. 279, 29 P. 851; Garrett Bib. Inst. v. Minard, 82 Kan. 338, 108 P. 80.)

Alfred F. Stone, for Respondent.

An attachment levied more than four months prior to bankruptcy in order to protect a judgment in such suit rendered within the four months' period from the operation of section 67 of the Bankruptcy Act must be valid. (In re Schow, 213 F. 514.)

The affidavit for a writ of attachment must set forth all of the statutory requirements, either in the language of the statutes or in language of substantially the same purport or meaning. If it fails to do so the court has no jurisdiction to issue the writ. (Kerns v. McAulay, 8 Idaho 558, 69 P. 539; Ross v. Gold Ridge Min. Co., 14 Idaho 687, 95 P. 821; Knutsen v. Phillips, 16 Idaho 267, 101 P. 596; Bellevue State Bank v. Lilya, 35 Idaho 270, 205 P. 893.)

When an affidavit for writ of attachment admits that one kind of security has been given for the debt sued on, it should negative the fact that any other of the forms of security mentioned in the statute have been given in order to entitle a plaintiff to a writ of attachment. (C. S., sec. 6780; Farmers' State Bank of Star v. Gray, 36 Idaho 49, 210 P. 1006; Knutsen v. Phillips, supra; Bellevue State Bank v. Lilya, supra.)

An attachment upon two causes of action, one of which is secured, will be dissolved. (Willman v. Friedman, 3 Idaho 734, 35 P. 37.)

An attachment issued upon a false affidavit will be dissolved. (Mark Means Transfer Co. v. MacKenzie, 9 Idaho 165, 73 P. 135; Barton v. Groseclose, 11 Idaho 227, 81 P. 623; Willman v. Friedman, supra.)

An attachment issued upon a false affidavit is void. A creditor acquires no rights under a void attachment. (Murphy v. Montandon, 3 Idaho 325, 35 Am. St. 279; 29 P. 851; Vollmer v. Spencer, 5 Idaho 557, 51 P. 509.)

A third person injuriously affected by a void attachment may maintain an action to set the same aside even after judgment has been entered in the attachment suit, since jurisdictional defects are not, like other irregularities, waived by plea of the defendant to the merits. (C. S., sec. 6816; Murphy v. Montandon, supra; Kerns v. McAulay, 8 Idaho 558, 69 P. 539; Whitney v. Brunette, 15 Wis. 61; Walker v. Roberts, 4 Rich. (S. C.) 561; Schwartz v. Cowell, 71 Cal. 306, 12 P. 252; Greene v. Trip, 11 R. I. 424.)

WM. E. LEE, J. William A. Lee, C. J., and Givens and Taylor, JJ., concur.

OPINION

WM. E. LEE, J.

--On August 28, 1920, there was pending in the district court for Canyon county an action in which the Overland National Bank was plaintiff and Walter R. Sebree was defendant. On that date there was filed in the action an affidavit for attachment and thereafter a writ of attachment was issued under which property belonging to Sebree was attached. On the twenty-seventh day of December, 1920, judgment was made and entered in favor of the bank and against Sebree. Execution issued and the property theretofore attached was sold at sheriff's sale.

Sebree filed a petition in bankruptcy on March 12, 1921, and was thereafter adjudged a bankrupt. On May 21, 1921, the present action was commenced. The plaintiff is the trustee in bankruptcy of Sebree, as indicated by the title, and the defendant is the successor in interest of the Overland National Bank, the plaintiff in the action against Sebree. The purpose of this action, as expressed in the prayer, was to have the attachment lien obtained in the action of Overland National Bank v. Sebree "declared null and void and that the same and all proceedings thereunder be dissolved." It is alleged that on December 27, 1920, the said Sebree was insolvent. This was the date of the entry of the judgment against Sebree. There is no allegation that Sebree was indebted, other than to the Overland National Bank, when the attachment was obtained. The cause was tried to the court without a jury, and the appeal is from a judgment in favor of the trustee.

While the Bankruptcy Act recognizes the validity of liens obtained more than four months prior to the filing of the petition in bankruptcy, a fair consideration of the law and its purposes impels one to the conclusion that only valid liens obtained more than four months prior to the filing of the petition are exempted from the operation of the act. (Black on Bankruptcy, 4th ed., sec. 934.) The Bankruptcy Act (sec. 70) vests the trustee with the title of the bankrupt as of the date of the adjudication in bankruptcy. As to property not in custody of the bankruptcy court, he is vested, under the act (sec. 47a-2), with "all the rights, remedies and powers of a judgment creditor holding an execution duly returned unsatisfied." This status is assumed as of the date of the filing of the petition in bankruptcy. (Bailey v. Baker Ice Mach. Co., 239 U.S. 268, 36 S.Ct. 50, 60 L.Ed. 275; Acme Harvester Co. v. Beekman Lumber Co., 222 U.S. 300, 32 S.Ct. 96, 56 L.Ed. 208; Fairbanks Steam Shovel Co. v. Wills, 240 U.S. 642, 36 S.Ct. 466, 60 L.Ed. 841.) While it is admitted that the attachment was obtained more than four months prior to the time that Sebree was declared a bankrupt and that judgment was made and entered within four months prior to the adjudication in bankruptcy, it is well settled that the lien was created by the attachment, and that the lien is not affected by the fact that judgment was entered within the four months' period. (In re Blair, 108 F. 529; In re Crafts-Riordon Shoe Co., 185 F. 931; Metcalf Brothers & Co. v. Barker, 187 U.S. 165, 23 S.Ct. 67, 47 L.Ed. 122; In re Beaver Coal Co., 113 F. 889, 51 C. C. A. 519.)

The trustee claims that the affidavit for attachment was insufficient and false; that the court, therefore, was without jurisdiction to issue the writ of attachment and that the purported lien of the attachment was void.

It was set forth in the affidavit for attachment that one of the notes "was originally secured by a pledge of certain...