Shear Co. v. Currie

• Decision Date: 11 December 1923
• Docket Number: 4207.
• Citation: 295 F. 841
• Parties: SHEAR CO. v. CURRIE. In re BRIDGEWATER.
• Court: U.S. Court of Appeals — Fifth Circuit

295 F. 841

SHEAR CO. v. CURRIE.

In re BRIDGEWATER.

No. 4207.

United States Court of Appeals, Fifth Circuit.

December 11, 1923

Rehearing Denied January 31, 1924.

J. D Williamson, of Waco, Tex., for petitioner.

W. M Sleeper, of Waco, Tex. (Sleeper, Boynton & Kendall, of Waco Tex., on the brief), for respondent.

Before WALKER and BRYAN, Circuit Judges, and GRUBB, District Judge.

GRUBB District Judge.

This is a petition to revise in matter of law an order of the District Court for the Western District of Texas in the bankruptcy proceedings of P. P. Bridgewater, which disallowed the petitioner the Shear Company's petition for a priority of lien on a certain tract of land over the lien of the estate of D. M. Currie, deceased. The lien of the petitioner arose out of the levy of an attachment on April 23, 1920, on the land as the property of the bankrupt for a debt due from him and its subsequent foreclosure. The lien of the respondent arose out of a vendor's lien, created October 16, 1911, and a subsequent unrecorded transfer of it by the bankrupt to the respondent. The case was tried without a jury and upon agreed facts substantially as follows:

The bankrupt on October 16, 1911, conveyed the land to J. T Bowen by warranty deed, in which a vendor's lien was reserved to secure part of the unpaid purchase money. There was a prior lien on the land which was assumed by Bowen. On October 18, 1913, the bankrupt assigned the notes executed by Bowen for the unpaid purchase money and the vendor's lien securing them to D. M. Currie. The assignment was not recorded. On December 14, 1916, J. T. Bowen reconveyed the land to the bankrupt for a recited consideration of $7,500, and the assumption of the prior lien. This deed was recorded on December 16, 1916. On the same day the bankrupt, with consent of Currie, and for the purpose of securing a new loan to take up the prior lien, and of postponing the Currie lien to that of the new loan, released the vendor's lien, reserved by him in the deed from him to Bowen. The release recited satisfaction of the Bowen notes, but they were not in fact paid. The release was recorded December 26, 1916. On December 15, 1916, the bankrupt executed a deed of trust on the lands to the Commerce Farm Credit Company for $5,000, substituting it for existing prior liens to the Currie lien, and it was recorded December 26, 1916. On August 21, 1918, the bankrupt and the executor of D. M. Currie executed a written instrument, reciting that the estate of Currie had a vendor's lien on the land created by the deed to Bowen from the bankrupt, and transferred by the bankrupt to D. M. Currie along with notes it secured, on October 18, 1913; that the bankrupt had reacquired the land, and had assumed the lien. The agreement acknowledged the indebtedness, and granted an extension, reserving to the Currie estate all the rights it theretofore had in the notes and lien, except as their maturity was postponed by the terms of the extension. This instrument was not recorded until December 1, 1921. The bankrupt filed a voluntary petition on April 4, 1922. On April 22, 1920, the Shear Company filed its attachment suit. On April 23, 1920, the levy on the land was recorded in the office of the county clerk, and on November 20, 1920, the attachment lien was foreclosed.

Out of these facts is presented the question whether or not, under the laws of Texas, the lien of the Shear Company, the attaching creditor, is superior to the lien of the estate of D. M. Currie under an unrecorded assignment of a vendor's lien, the lien having been released on the record before the levy of the attachment.

At common law, apart from the effect of registration statutes, the lien of a creditor, obtained through the institution of legal proceedings, is confined to the interest of the debtor in the property at the time of the levy of the process, and this is the rule in Texas. The rule in Texas in cases of attachment liens has been held to be different by reason of its registration statutes from the common-law rule. In the case of Paris Grocer Company v. Burks, 101 Tex. 106, 105 S.W. 174, the Supreme Court of Texas said:

'That the lien of the attachment must prevail over the unrecorded deed, unless the creditor, prior to the levy, had notice of such deed, is a proposition put beyond all question by the decisions of this court. The right of the creditor is purely statutory, and requires nothing but the concurrence of the conditions required by the statute to make it complete. The statute by its terms makes void the unrecorded deed as against 'all creditors,' but the courts hold this to mean all creditors who have acquired liens without notice of the deed. When these elements exist, the right of the creditor is perfect in law, and no considerations of equity or questions of estoppel enter into the case. It is wholly immaterial whether the creditor has ever examined the records as to the title of his debtor or not, since a deed of the property executed by the latter is, by the statute, made void as against the lien of the former, unless he is affected with notice.' In that case, an unrecorded deed was postponed to an attachment lien, not upon the ground that credit had been extended to the

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