Wagner v. Mt Carmel Iron Works

• Decision Date: 17 January 1921
• Docket Number: 2621.
• Citation: 270 F. 80
• Parties: WAGNER v. MT. CARMEL IRON WORKS.
• Court: U.S. Court of Appeals — Third Circuit

270 F. 80

WAGNER v. MT. CARMEL IRON WORKS.

No. 2621.

United States Court of Appeals, Third Circuit.

January 17, 1921

John O Ulrich, of Tamaqua, Pa., for petitioner.

William W. Ryon, of Shamokin, Pa., for respondent.

The following is the opinion of Witmer, District Judge, in the Court below:

John F Wagner obtained a judgment against the Mt. Carmel Iron Works on his bill filed in this court, charging defendant with infringement of a certain patent of which he was the owner. Judgment was entered January 9, 1920, which was certified to the court of common pleas of Northumberland county, whereupon a writ of execution was issued and levy made on defendant's personal property. Within a few days thereafter, March 15, 1920, the defendant filed its petition in bankruptcy and was in due time adjudicated a bankrupt. On petition of certain creditors a restraining order was allowed, which is now sought to be vacated.

The judgment plaintiff, Wagner, insists that his judgment, being founded upon a tort which was characterized by the master appointed by this court to ascertain the damages for infringement, as 'deliberate, wanton, and continuous,' will not be discharged by the bankruptcy proceedings; hence he should be allowed to recover his damages from the property of the bankrupt. If the premise is correct, the conclusion does not follow. Whether the bankrupt may be discharged from the obligation of Wagner is not now the important question; the query being: Does the filing of the petition, followed by an adjudication in bankruptcy discharge and free the bankrupt's property from the levy obtained by Wagner?

The answer will be found in section 67f of the Bankruptcy Act of 1898 (Comp. St. Sec. 9651). This section provides: 'That all levies, judgments, attachments, or other liens, obtained through legal proceedings against a person who is insolvent, at any time within four months prior to the filing of a petition in bankruptcy against him, shall be deemed null and void in case he is adjudged a bankrupt, and the property affected by the levy, judgment, attachment, or other lien shall be deemed wholly discharged and released from the same, and shall pass to the trustee as a part of the estate of the bankrupt, unless the court shall, on due notice, order that the right under such levy, judgment, attachment, or other lien shall be preserved for the benefit of the estate; and thereupon the same may pass to and shall be preserved by the trustee for the benefit of the estate as aforesaid.'

It is apparent that the effect of this provision of the act avoids all liens, created by levy, judgment, attachment, or otherwise, within four months of bankruptcy, and invalidate the same as against the trustee and those claiming under him so as to allow the bankrupt's property to pass to and be distributed by him among the creditors of the bankrupt. Any number of authorities could be cited to the effect, but the following will suffice: Casady & Co. v. Hartzell, 34 Am.Bankr.R. 236, 171 Iowa, 325, 151 N.W. 97; People's National Bank v. Maxson, 33...