Wagner v. Mt. Carmel Iron Works

BUFFINGTON, Circuit Judge.

On March 15, 1920, the Mt. Car-mel Iron Works, a manufacturing corporation of Pennsylvania, was adjudged a bankrupt in the court below. Previous thereto John F. Wagner had filed a bill in said court against it, charging it with infringing his patent. The case was so proceeded with that there was a decree of infringement and an accounting (244 Fed. 818), which accounting resulted in a money decree for $26,461 on January 9, 1920. A few days before the adjudication in bankruptcy, Wagner issued process on his decree, levied on the property of the corporation, and after the adjudication attempted to sell the same. Thereupon the bankruptcy court, on petition of the company, restrained Wagner from so selling the assets of the company. The present petition to review calls in question the authority of the court to restrain said process and to prevent the assets of the companjr from being taken from its grasp thereby. Such authority, pursuant to an opinion printed herewith, fhe court below held it had.

We find no error in the court’s action. Under the facts, there is no doubt that the lien on the corporation’s personal property by his execution was obtained against the insolvent debtor within four months prior to the filing of the bankruptcy petition. Such being the case, section 67f of the Bankruptcy Act, quoted in the opinion, enacted that such an intra-four months lien “shall be deemed null and void in case he is adjudged a bankrupt, and the property affected by the levy * * * shall be deemed wholly discharged and released from the same.” And rightfully so, for, had Congress enacted other than it did in these plain words, or had courts, by construction, given any supposed limitation to those plain words, and thereby had intra-four months liens been allowed to take away the assets which passed to- the bankruptcy court by the filing of the petition in bankruptcy, the power of the court to administer bankrupt estates would have been absolute!}'defeated.

*82It is clear, therefore, that the decree below should be affirmed, and the lien creditor be left to again pursue what he originally did when, without objection, he proved his claim as a general creditor, and then, after having thus the opportunity to participate on an equality with all other creditors, he withdrew his claim and sought as an intra-four months creditor to take the bankrupt’s assets from bankrupt administration for all and take it wholly for himself.

The decree below will be affirmed, without prejudice to the right Of the petitioner to take proper steps to reinstate his lien as a proved claim, which course counsel for the receiver concede he has a right to pursue.