Morgan v. Campbell, Assignee

• Decision Date: 01 October 1874
• Citation: 89 U.S. 381,22 Wall. 381,22 L.Ed. 796
• Parties: MORGAN v. CAMPBELL, ASSIGNEE
• Court: U.S. Supreme Court

89 U.S. 381

22 L.Ed. 796

22 Wall. 381

MORGAN v. CAMPBELL, ASSIGNEE.

October Term, 1874

APPEAL from the Circuit Court of the United States for the Northern District of Illinois.

This was a contest between a landlord of demised premises claiming rent, and the assignee in bankruptcy of his tenants, claiming certain personal property on the premises, out of which the landlord by distress expected to get his rent.

The case, which depended more or less upon statute law of Illinois, in force at the time of the landlord's levy, was thus:

A statute of Illinois known as its Landlord and Tenant Act,¹ enacts as follows, in certain sections its enactments bearing on the subject of rent, distress, &c.:

'SECTION 6. In all cases of distress for rent, the person making the same shall immediately file with some justice of the peace, in case the amount claimed does not exceed $100, or with the clerk of the Circuit Court in case it exceeds that sum, a copy of the distress warrant, together with an inventory of the property levied upon; and thereupon the party against whom the distress warrant shall have been issued shall be duly summoned, and the amount due from him assessed and entered upon the records of the court finding the same. The said court shall certify to the person or officer making the same the amount so found due, together with the costs of court, and said officer shall thereupon proceed to sell the property so distrained and make the amount thus certified to him, and return the certificate so issued to him with an indorsement thereon of his proceedings, which return and certificate shall be filed in the proper court.

'SECTION 7. In all cases of distress for rent it shall be lawful for the landlord, by himself, his agent, or attorney, to seize for rent any personal property of his tenant that may be found in the county where such tenant shall reside, and in no case shall the property of any other person, although the same may be found on the premises, be liable to seizure for rent due from such tenant.

'SECTION 8. Every landlord shall have a lien upon the crops, growing or grown upon the demised premises in any year, for rent that shall accrue for such year.

'SECTION 9. In case of the removal or abandonment of the premises by such tenant, all grain or vegetables grown or growing upon any part of the demised premises so abandoned may be seized by the landlord, before the rent is due, and the landlord so distraining shall cause the grain or vegetables so growing to be properly cultivated and perfected, and in all cases husband such grain or vegetables, grown or growing, until the rent agreed upon shall become due, when it shall be lawful for such landlord to sell and dispose of the same as in other cases of seizure, after the rent shall have become due,' &c.

These enactments being in force, one Morgan, on the 18th of June, 1872, leased to Liebenstein & Spiegel certain premises in Chicago, Cook County, Illinois, at a rent of $750 per month, payable September 30th, 1872, and on the last day of every month thereafter. The lease provided that if default should be made in the payment of the rent, when due, Morgan might distrain upon any property belonging to lessees, whether exempt from execution and distress by law or not, and the lessees waived all right to hold or retain any such property under any exemption laws then in force in the State of Illinois, or in any other way; 'meaning and intending hereby,' said the lease, 'to give the said party of the first part, his heirs, executors, administrators, or assigns a valid and first lien, upon any and all goods and chattels and other property belonging to the said party of the second part, as security for the payment of said rent in manner aforesaid, anything hereinbefore contained to the contrary notwithstanding.'

Liebenstein & Spiegel entered into possession of the premises, but paid only one month's rent.

On the 14th of May, 1873, a petition was filed in the District Court for the Northern District of Illinois, by one Harrington, charging Liebenstein & Spiegel with having committed acts of bankruptcy, and praying that they might be declared bankrupts.

Three days afterwards, that is to say on the 17th of May, between seven and eight months' rent ($5250) being now due—Morgan, the landlord, issued his warrant to the sheriff of Cook County for distraining the goods and chattels of his tenants, then on the premises, to pay the rent due; and on the same day the sheriff did levy the warrant upon them, and held them under the warrant, on the premises. On the 16th of June, 1873, he filed in the proper court an inventory of them, and caused a summons in the matter to be issued against the tenants in the way prescribed by the sixth section of the above-quoted Landlord and Tenant Act, and served upon them.

Liebenstein & Spiegel, the tenants, were afterwards declared bankrupts, and one Campbell was appointed their assignee. After his appointment he demanded of Morgan, the landlord, and his bailiff, possession of the chattels taken by them in distress, and held under Morgan's warrant of distress; and against the protest of both Morgan and his bailiff, took the same and was about to sell them.

Thereupon Morgan filed a bill in the court below to enjoin him.

The assignee in bankruptcy demurred to the bill.

The question of course was: Did the law of Illinois, in force on the 14th of May, 1873, when the petition in bankruptcy was filed, confer on a landlord a lien on the personal property of his tenant independently of and prior to the levy of a warrant of distress?

If it did, then, under the settled rule of bankruptcy law the lien would not be divested; proceedings in bankruptcy never divesting existing liens.²

But if it did not so exist, then the assignee in bankruptcy would take the property for distribution among the creditors generally; it being equally settled that no lien can be acquired after the filing of a petition in bankruptcy;³ this, in virtue of the provision of the fourteenth section of the Bankrupt Act, which enacts that on the appointment of an assignee, and on the assignment to him of the bankrupt's property and estates, the——

'Assignment shall relate back to the commencement of the proceedings in bankruptcy, and thereupon, by operation of law, the title to all such property and estate, both real and personal, shall vest in said assignee, although the same is then attached on mesne process as the property of the debtor.'

The court below sustained the demurrer, thus deciding that prior to and independently of an actual levy of the warrant of distress, a landlord had not in Illinois any lien on his tenant's personal property.

Morgan, the landlord in this case, appealed to this court.

Mr. J. A. Sleeper, for Morgan, the appellant:

1. We submit that by the common law, and the statute of the State of Illinois and the law of the State, as expounded and interpreted by its Supreme Court, the lien of the landlord on the property of the tenant for rent due is paramount and superior to the right of an execution or attaching creditor, a general assignee for the benefit of creditors, or an assignee in bankruptcy.

In Penny v. Little,⁴ A. D. 1841, the Supreme Court of Illinois had under consideration the question of the right of the landlord to distrain for rent, and held that the right existed independently of the statute and in virtue of the common law.

The same court had the question of the right of a landlord in, and lien upon, the property of his tenant, under consideration in O'Hara v. Jones,⁵ and referring to Penny v. Little, say:

'Under our law the landlord has the lien and the right to distrain in all cases where the rent is certain, whether the right to distrain is reserved in the lease or not. And this statutory lien in favor of the landlord is superior to other junior liens, and may be enforced against all but prior liens and bon a fide purchasers without notice; and if the goods of a tenant are seized under execution or attachment, the landlord's lien for his rent is superior and will hold the property.'

And upon these principles, thus laid down, the court decided that an assignee for the benefit of creditors, takes the property as a mere volunteer, and subject to all liens to which it is then liable; and that if liens exist upon the property when the assignment is made, they must be first discharged, in the order of their priority, and the remainder applied in execution of the trusts.

This decision, we submit, controls the subject.

We do not seek to maintain that, before the rent becomes due, the landlord has either a superior lien over execution or attaching creditors, or the right to distrain the property for the rent; but that he, all along, has an inchoate right, which may not be asserted, and cannot be, until all the conditions upon which his right to distrain are fulfilled; and that when the conditions are fulfilled, by rent becoming due and being unpaid, then eo instanti he may issue his distress warrant and seize the property.

As the court in O'Hara v. Jones,⁶ says:

'The landlord's lien is like the lien of an execution on personal property of the tenant. . . . He has the power, when the rent falls due, to issue his execution to his bailiff for collection of his rent by levy and sale of the tenant's property. The landlord's lien is of common-law growth, and does not depend upon statutory enactments for its creation. . . . But the landlord's right to distrain is coeval with the entire history of the common law, and has maintained its energy to the present time.'

If anything previously said in Rogers v. Dickey⁷ different from this—which we do not think is the case—it is overruled by the later decision.

In O'Hara v. Jones the court supply the reasoning which follows from the facts in Rogers v. Dickey, and hold that inasmuch as the rent was due March 1st, 1867, and the assignment was made March 9th, 1867, the landlord's lien was...