Lynch v. Johnson

Walker, J.,

concurring: As the debts of O. R. Johnson, the bankrupt, were evidently contracted since the creation of the alleged trust, the trustee in bankruptcy, under the' amendment of 1910, stood in the position of a creditor and was vested, by the amendment, with all “the rights, remedies, and powers of a creditor holding a lien by legal or equitable proceedings thereon” as to all property in the custody of the bankruptcy court. A creditor, holding such a lien, founded upon a debt contracted since the creation of the resulting or parol trust, and with a record which disclosed that Johnson was the absolute owner of the property, would hold his lien on the land discharged of the trust, as he would be in the analogous position of a purchaser for a new consideration of value, who had bought the land without notice of the trust, as both creditors and purchasers are protected in the same *618way and for tbe same reason. They are both innocent holders, who are favored- by the law. ' Even a creditor or purchaser whose right is based upon an antecedent debt or consideration is considered as holding his right for value, under -the 13th Elizabeth, as against other creditors, though not under the 27th Elizabeth as against a prior donee; but if the consideration is parted with upon the faith of an absolute title in the debtor, as appears by the record, the creditor with a lien in law upon the land should fairly come within the principle which protects purchasers and creditors against prior equities. McKay v. Gilliam,, 65 N. C., 130. It is said by Mr. Black in his recent work on Bankruptcy (1914), sec. 316, that the amendment of 1910 gives the trustee a superior position to the one held by him before that change in the law. And Mr. Collier, in his book on Bankruptcy (9th Ed. of 1912), p. 1000, says that “The amendment of 1910 has extended the title of the trustee, so that he has now more than the limited title of the bankrupt,” and this must needs be so, for otherwise the amendment would have little or no force or effect. Black also says, in the section above cited, that the old decisions have but slight application since the change in the law. There is no pretense here that creditors of Johnson, whose position the trustee now occupies, had any notice of the trust at the time their claims were contracted or since. ' If the purchasers at the bankrupt’s sale- bought with notice, they would yet get a good and valid title as against plaintiff Lynch, if the creditors of Johnson had no notice and the trustee is to be regarded as one holding the rights of a creditor with a judgment lien. Suppose a creditor had sued and obtained judgment before the bankruptcy, his lien on the land would be preserved; and if his judgment was based on a debt antedating the bankruptcy, it would seem that his right would prevail over that of the plaintiff holding a mere equity; and by the amendment the trustee holds, for the creditors, just as if they had judgment liens at the time of the adjudication of bankruptcy. It further appears to me, on the other question, as to the delivery of the deed, that the fact of there being a return card on the envelope, instead of weakening the defendant’s case, tends greatly to strengthen the presumption that the deed was received, as it did-not come back, when in the usual course of the mails it should have done so. It doubles the presumption in strength.

As to the acceptance of the deed, this was not necessary, as plaintiff, on his own showing, had the full beneficial interest and Johnson only the naked legal title. The statute (27 Henry Till.) having executed the use, it was Johnson’s duty to convey the legal estate to Lynch, who already had it, by virtue of the statute, but not the written evidence of it. There are decided cases in which the bankruptcy courts have ordered trustees to make just such conveyances where the *619right to the deeds was clear and the equity free from any claim of creditors.

I would also refer to tbe doctrine of laches as applicable to this case, but in the closing hours of the term, and for lack of time, it will be impossible for me to make any reference to the authorities upon that question.