Holyoke v. Adams

Beady, J.

In this case the proceedings in bankruptcy were not commenced within four months after attachment was granted, and the attachment, if it had been cohtinued, would not, therefore, have been dissolved by operation of the bankrupt law. The fourteenth section declares only that attachments made within four months next preceding the commencement of such proceedings shall be dissolved. The result of the attachment is a vested right, which is to have the property seized applied to the extinguishment of the *3debt, subject, however, to the right of the debtor to substitute anx undertaking prescribed by law. The plaintiff, by attaching property, acquires a specific lien upon the debtor’s interest, and is entitled like a judgment creditor to impeach the colorable title of a fraudulent mortgage. Rouchey v. Striker, 26 How. 73; Frost v. Mott, 44 N. Y. 253. The execution and delivery of such an undertaking to release the property should be held in legal contemplation to be a part and in continuation of the attachment proceedings. The propriety of this is apparent from the obligation assumed by the sureties, whicfi is to pay any judgment that may be recovered in the action, the sureties thus agreeing to do exactly what the property seized would do Avhen applied, namely, pay the judgment obtained, and also from the presumption that the property levied upon would have remained in statu quo until the judgment was recovered, if the undertaking had not been given. The application of this principle in this case would protect the plaintiff from the intervention of a power by which he might otherwise be deprived of a substantial right, acquired by superior diligence, under the laws of the State. The character of the undertaking, its subject, office and purpose, hoAvever, leave no doubt that it is a substitute for the levy under the attachment Avhich is in effect continued, although the process is discharged. There is another view of this question, which may be stated thus: The undertaking having been given, the sureties assumed the payment of the debt alleged when established by process of law, and they became the debtors of the plaintiff on condition that the demand was proven and judgment for it obtained. This obligation rests upon, and the consideration is, the delivery of the property seized, a delivery predicated entirely of their promise to pay the claim for the discharge of which the property released was seized. Their liability, therefore, depends upon whether the debtor at the time of the giving of the undertaking was lawfully indebted to the plaintiffs, and, to ascertain that, the judgment must be recovered, for such, as already suggested, is the condition of the obligation assumed by them. If this view be correct, it is immaterial whether the debtor has been discharged from his indebtedness or not by subsequent proceedings. Such a result would not affect the liability of the sureties whose undertaking related to an existing liability, which, as soon as determined, made their promise absolute. For these reasons, in addition to those already given, the order of the special term should be affirmed. *4This appeal is thus disposed of, without considering whether the fourteenth section of the bankrupt act is constitutional — whether, when the jurisdiction of a State court has been invoked, and rights have been secured under it, they can be taken away by proceedings in another court under the provisions of the constitution of the United States. It might not be difficult to solve this problem, although it has been held in proceedings in bankruptcy that congress has the power .by operation of a general bankrupt law to divest the conditional lien acquired by levy of an attachment. Bump on Bankruptcy (5th ed.), 329, and cases cited. We have examined, but do not feel bound to follow, the cases cited on the argument which were decided in the courts of Massachusetts.

Ingraham, P. J., and Fancher, J., concurred.

Order affirmed.