Sampsell v. Straub

• Decision Date: 21 April 1952
• Docket Number: No. 12676.,12676.
• Citation: 194 F.2d 228
• Parties: SAMPSELL v. STRAUB et al.
• Court: U.S. Court of Appeals — Ninth Circuit

194 F.2d 228 (1951)

SAMPSELL v. STRAUB et al.

No. 12676.

United States Court of Appeals Ninth Circuit.

December 27, 1951.

Writ of Certiorari Denied April 21, 1952.

Craig, Weller & Laugharn, Thomas S. Tobin, Los Angeles, Cal., for appellant.

Grainger, Carver & Grainger, Los Angeles, Cal., for appellee.

Shapro & Rothschild, San Francisco, Cal., amicus curiae.

Before ORR, POPE and HASTIE,^* Circuit Judges.

Writ of Certiorari Denied April 21, 1952. See 72 S.Ct. 761.

HASTIE, Circuit Judge.

On first hearing of this appeal, 189 F.2d 379, we concluded that the bankrupts, Curtiss Straub and his wife Miriam, were entitled to have their California residence set aside from the bankrupt estate as exempt homestead property although their declaration of homestead had not been recorded as required to become effective under California law until after bankruptcy adjudication. Recognizing that Section 70, sub. c of the Bankruptcy Act¹ arms the trustee "as to all property of the bankrupt at the date of bankruptcy * * *" with "all the rights, remedies, and powers of a creditor then holding a lien thereon by legal or equitable proceedings", we were not persuaded that under California law there is any such creditor as Section 70, sub. c describes whose lien would prevail over a subsequent recordation of a homestead claim. In this connection it was urged that the lien which California law gives a judgment creditor who voluntarily records an abstract of a judgment does prevail over a subsequently recorded homestead claim. The parties agree that such is the law of California. Schuler-Knox Co. v. Smith, 1943, 62 Cal.App.2d 86, 144 P.2d 47. But we were not persuaded that a lien obtained in this manner is "a lien by legal or equitable proceedings" within the meaning of Section 70, sub. c. It is this question of the proper characterization of the lien obtained in California by recording a judgment which we now re-examine.

In the analysis which led to our earlier conclusion concerning the nature of this lien we stressed the distinct and voluntary character of the act of the judgment creditor in recording the abstract of his judgment and the necessity for such voluntary and distinct action to change his status from that of general creditor to that of lienor. Also, we were influenced by the view of the California courts, expressed in a context other than bankruptcy, that the recordation of an abstract of judgment should be distinguished from "judicial proceedings" under California law. Coley v. Hecker, 1928, 206 Cal. 22, 272 P. 1045; Gudger v. Manton, 1943, 21 Cal.2d 537, 545, 134 P.2d 217, 222. Of course the views of the California courts, however respected, cannot have the force of law in determining our decision as to the proper construction of language used by Congress in the Bankruptcy Act, but they are suggestive.

On the other hand, the lien obtained by recording an abstract of judgment is described as a judgment lien. The California statute provides that a "judgment or decree becomes a lien" upon the filing of the abstract. Code of Civil Procedure, § 674. And while recordation is an independent step in the sense of being something voluntary beyond the entry of judgment, it is incidental to the judicial proceeding in the sense of a device to give a judgment particular additional effect. The judgment is the basic and fundamental source of rights whether generally before recordation or by way of lien after recordation.

If these possibilities of rational analysis pro and con were all we would not be disposed to disturb our decision; for analysis of the words of Section 70, sub. c alone does not make the issue clear either way. But, with the issue thus doubtful, another consideration, not urged at first argument, should be weighed. Section 70, sub. c is not the only section of the Bankruptcy Act which mentions liens by legal or equitable proceedings. Identical or equivalent language appears in several sections of the Act, among them, Section 3, sub. a (3) and Section 67, sub. a.² If there are reasons which require a certain construction of a phrase in one part of a statute, it is desirable, and presumably in accord with the intention of Congress that a similar construction be given that phrase elsewhere in the statute unless the context shows affirmatively that a different construction was intended.³

The context of Sections 3, sub. a(3) and 67, sub. a rather clearly indicates that the California judgment lien should be regarded as a lien obtained by "legal proceedings" within the meaning of these sections. The two sections are complementary. Section 3, sub. a(3) makes it an act of bankruptcy for an insolvent person to permit any creditor "to obtain a lien upon any of his property through legal proceedings" and not discharge the lien within thirty days. Concomitantly, any such lien obtained within four months before bankruptcy is made voidable by Section 67, sub. a. Both sections are designed to prevent creditors of the bankrupt who obtained no preferred status in the normal course of the business transactions out of which their claims arose from later impressing the property of the insolvent debtor with liens obtained through diligent resort to legal proceedings. Their purpose is thus to implement a fundamental policy of maintenance of equality among general creditors after insolvency. That policy would be as much violated if the general creditor should become a lienor by getting a judgment and recording it as it would be if he should achieve similar preferential status by the obtaining of a judgment alone. The cases seem to accept this as clear beyond need for elaboration. In re Jackson Light & Traction Co., 5 Cir., 1920, 269 F. 223; Jefferson Transfer Co. v. Hull, 1918, 166 Wis. 438, 166 N.W. 1; Thomas v. Louisiana Oil Refining Co., La. App., 1938, 179 So. 483. We think, therefore, that the only reasonable construction of the questioned phrase in these two sections is that which includes a California judgment lien among liens obtained by "legal proceedings", even though voluntary recordation is the essential final step in its creation.

Section 70, sub. c on the other hand is employed primarily to protect general creditors of the bankrupt against secret liens. To this end the...